IS YOUR AIRLINE? The sustainability debate - OAG
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February 2020
HOW
GREEN IS YOUR AIRLINE?
The sustainability debate
MAKE SMARTER MOVES
‘ENVIRONMENTAL
STEWARDSHIP IS
THE EXISTENTIAL
THREAT TO OUR
FUTURE ABILITY
TO GROW’
Ed Bastian, CEO Delta Air Lines
speaking 12th December 2019 Investor Day 2019
(Reported in Atlanta News Now)
2
HOW GREEN
IS YOUR AIRLINE?
Scientists may have been talking about climate change
for years but 2019 was the year when the issue went
mainstream. Even as the year ended, the news was filled
with stories about rampant bushfires in Australia and
flooding in Indonesia. As the evidence mounts that the
earth is warming, climate related impacts are both being
seen more widely and are also being reported more widely
by a media thirsty for news which makes headlines.
For aviation, which accounts for 2.4% of global CO2 emissions, according to
the International Council on Clean Transport1, it is a difficult time. Arguably, the
industry has been reluctant to engage on the topic, at least in public, although
behind the scenes there have been plenty of measures taken to significantly
improve the impact of flying aircraft. The problem, however, is that no matter
how fast the industry brings down CO2 emissions, the number of people flying
grows faster. As other industries reduce their dependence on fossil fuels, an
industry dependent on kerosene, as aviation is, risks accounting for an ever-
growing share of global emissions. The industry faces the real possibility that it
could become a toxic brand within the next decade.
In this paper, OAG aims to take a dispassionate look at the problem, the action
the industry has been taking, the difficulties associated with communicating
with the public, and possible consumer responses to flying as a result of
climate change.
1
www.theicct.org/publications/co2-emissions-commercial-aviation-2018
3
WE LIKE TO TRAVEL.
WE LIKE TO FLY.
Anyone who read the bestselling book The Silk Roads by Peter Frankopan a few years ago will have been
struck by the extent to which people have moved vast distances across land to explore new places, trade
and settle over the course of two millennia. The same is true today. People love to travel, and air travel has
become a core part of the process. Since mass air travel became a possibility, little stopped our appetite for
it. When OAG analysts tracked the impact of major global events such as 9/11, SARS outbreak, the eruption
of volcanoes, global recession, etc., which temporarily reduced growth in air travel, the effect has been just
that - temporary. Within months, or at most 2 years, growth returned to a level similar to before the event.
Since 2000, the number of aircraft seats (capacity) has grown at an average annual rate of 3.6% while
Available Seat Kilometres (ASKs) have grown by 4.6%. The faster growth of ASKs than seats indicates
that the average flight is longer than it used to be.
ASKS Growing faster than capacity (seats) Source: Schedules Analyser
7 ASKs 12,000
Seats
6 10,000
ASKs - Billions
5
Seats - Billions
8,000
4
6,000
3
4,000
2
1 2,000
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
In the dying months of 2019, teenage activist Greta Thunberg captured the attention of millions with her
long-distance travel across the Atlantic, hitching a ride on a yacht and choosing to travel by train when
making a six-country tour across Europe. Her lack of compromise is hugely challenging for the many people
genuinely concerned about the impact of their flying habits; and the impact it is having; those who have
until now been able to compartmentalise air travel on the one hand, and concern for the environment on the
other. Many in the aviation industry probably fall into that category too.
The question going forward will be whether consumer habits will change, and whether any change will
be permanent. Will flygskam, or flying shame, lead to a significant and sustained reduction in air travel, or
is it just a localised and temporary phenomenon occurring in Northern Europe which has captured the
attention of the media?. There is no doubt that there has been a discernible impact on air travel, with the
first warnings coming out of Sweden.
4Swedavia, the Swedish airport operator, published year-end statistics for 2019 that showed a 4%
decrease in passengers at their Top 10 airports, while domestic passengers fell by 9% in the year2.
It would be easy to rush to the conclusion that this is attributable to concern for the environment,
given the media coverage, but the reasons may be more complex.
Scandanavian Airlines experience
traffic decline in home markets in 2019
Jan-Sep 2019 vs. Jan-Sep 2018 Source: Traffic Analyser
Sweden
Switzerland
Finland
Denmark
Norway
Belgium
UK
Germany
France
Netherlands
Italy
Spain
Ireland
Portugal
Austria
10% 5% 0% 5% 10% 15% 20%
Domiciled airlines Non domiciled airlines
OAG data for traffic from European markets, split out by airlines based, or domiciled, in each country
and the all others, shows that in the first nine months of 2019 across Scandinavia and Switzerland
passengers seemed to be flying less, at least on their national airlines. Swedish airlines saw the
biggest impact with numbers down by 4.1% but foreign airlines flying to Sweden saw passenger
volumes rise by 5.9% year-over-year. Across most of Europe, passenger numbers increased.
2
www.swedavia.com
5It is too simplistic, though, to attribute what we are seeing in Scandinavia to concern for the environmental
impact of flying. Between July and October 2019, according to OAG data, traffic from Sweden was down
by 22% at Norwegian and traffic at sister airline Norwegian Air Shuttle was down by 7%. While Braathens
also saw a drop-in traffic of 11%, at SAS the number of passengers was the same as the previous year and
Ryanair grew traffic by 9%.
Even in Sweden the drop in traffic is not being experienced across all airlines. In fact, much of the traffic
reduction can be attributed to Norwegian which has been very public about its efforts to reduce capacity and cut
loss-making operations to support profitability. The primary reason for its drop-in traffic is that it was flying less.
So, is there a flying shame effect? According to OAG Traffic Analyser, there has certainly been a reduction in
flying within Western Europe. While headline traffic numbers broadly tracked passenger volumes month-by-
month in 2018, as 2019 past overall growth reduced and August saw a fall of 1% in traffic, October’s
was down by 1% and November’s was down by 1.5%.
However, what people say they want and what they actually do can often be two very different things.
Austrian Airlines have been offering carbon offsetting for some time but fewer than 1% of passengers pay to
offset their carbon emissions3. Similarly, KLM offers a CO2ZERO scheme for carbon offsetting but in 2018
only 88,000 passengers travelled carbon neutral. That’s fewer than 0.5% of all passengers carried by KLM.
Western Europe passenger
growth declined through 2019 Source: Traffic Analyser
60,000,000 7.0%
6.0%
50,000,000
5.0%
40,000,000 4.0%
Year-over-Year Growth
Passengers
3.0%
30,000,000
2.0%
20,000,000 1.0%
0.0%
10,000,000
-1.0%
0 -2.0%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2018 2019 Growth
3
https://simpleflying.com/austrian-airlines-carbon-neutral-growth/
67
TECHNOLOGY
AND MAKING REAL
REDUCTIONS
Against this lethargy by the travelling public, the aviation industry – airlines, airports, manufacturers, air traffic
control – has been working hard to reduce emissions. Of course, this is not simply an altruistic exercise; airlines
experiencing the high oil prices of 2008 or the period between 2011 and 2014 know the risk to their businesses
when fuel makes up such a high proportion of operating costs. Improving the efficiency of aircraft and
operations in general has been a major strategic goal.
The result has been new aircraft types and airlines replacing older ones with newer, more efficient versions.
Data sourced from OAG DOT Analyser on the 25 largest airlines in the world by aircraft type for flights to and
from the United States shows how average fuel burn has improved with newer aircrafts although short haul
aircrafts cannot be easily compared with planes flying longer routes and the effect of fuel hedging by some
airlines can mask real underlying trends.
According to Airbus, CO2 emissions for today’s aircraft are 80% lower than they were back in 1970. Boeing
claim that the B787 Dreamliner uses 20-25% less fuel on a per passenger basis than the planes it replaces.
This is one of the facts which Europe’s largest low-cost airline, Ryanair, uses to make claims about being
Europe’s greenest airline, never mind that it has flown on average 7% more airline seats each year
for 10 years, far exceeding the improvements in aircraft emissions.
Newer and more efficient aircrafts may be the most obvious technological advance but there are numerous
other smaller measures which airlines and manufacturers have been taking.
– Aer Lingus worked with the Irish Aviation Authority (IAA) in 2018 to reduce the amount of time
landing lights were extended in both climb and descent. Following a successful to IAA
regulations, Aer Lingus’ A320 fleet now saves an additional 620 tonnes of fuel per year. 4
– Aer Lingus’s new A321 neos with a new generation engine type and sharklets reduce
fuel consumption by 15% compared to existing planes. 5
– At JetBlue new efficient A220 aircraft consume 40% less fuel than outgoing
Embraer 190 aircraft in the fleet. 6
– In 2018 KLM realised a reduction of 11,000 tons of CO2 emissions through route
optimisation and 4,400 tons of CO2 through weight reduction. 7
– KLM has also been a pioneer in the area of sustainable biofuel which may emit
80% less CO2 compared to fossil kerosene. 8
– Jetstar’s A321neo (long range) aircraft which begin arriving in 2020 uses 15%
less fuel than the aircraft they are replacing. 9
– Qantas is replacing its B747 fleet with newer B787 Dreamliners which burn 20% less fuel. 10
– On landing Austrian Airlines pilots taxi to the gate using just one engine, a measure
which has, according to the airline, saved 11,000 tons in CO2 each year. Austrian
Airlines has also reduced onboard weight by removing some newspapers, replacing
carpets and life-jackets with lighter models and by removing coffee machines on board. 11
8Fuel burn by aircraft type for Top 25 Global Airlines
US DOT Data Q2 2019 & Year aircraft entered service Source: OAG DOT Analyser
EMBRAER 190 2006
MD-80/1/2/3/8 1980
BOEING 717-200 1999
MD-90 1995
A320-100/200 1988
BOEING 777-200 1995
BOEING 777-300/ER 1998
A320-200/220F 1998
BOEING 767-300/ER 1986
BOEING 767-400/ER 2000
A319 1996
BOEING 757-200 1987
BOEING 737-700/LR 1997
A220-100 BD-500-1A 2016
B787-8 DREAMLINER 2011
AIRBUS A330-300 1993
A321 1994
B787-9 DREAMLINER 2014
AIRBUS A350-900 2015
BOEING 737-900 2001
BOEING 737-800 1998
BOEING 757-300 1999
B737-900ER 2007
B787-10 DREAMLINER 2018
A321-200N 2017
0.00 2.00 4.00 6.00
US cents per Available Seat Kilometre
4
“How Aer Lingus Worked with Regulators to Cut Emissions”, Simple Flying,
3rd December 2019. https://simpleflying.com/aer-lingus-cut-emissions/
5
“How Aer Lingus Worked with Regulators to Cut Emissions”, Simple Flying,
3rd December 2019. https://simpleflying.com/aer-lingus-cut-emissions/
6
“JetBlue: New Airbus A220s to offer more seats, bigger bins on Embraer
routes, 11 July 2018, USA Today https://eu.usatoday.com/story/travel/
flights/todayinthesky/2018/07/11/jetblue-airbus-220/774556002/
7
KLM Annual Report 2018
8
KLM Annual Report 2018
9
Qantas Annual Report 2019 https://www.qantas.com/au/en/qantas-
group/acting-responsibly/our-planet/reducing-emissions.html
10
Qantas website https://www.qantas.com/gb/en/about-us/our-company/
fleet/qantas-b787-9.html
11
“Austrian Airlines Aims to Achieve Climate-Neutral Growth as of 2020”,
Austrian Airlines press release
9TARGETS, OFFSETTING
AND BENCHMARKING
Against this backdrop of real improvements in performance, the industry has come together to set
collective targets. Most notable are those published by IATA, the scheduled airline industry
association, back in 2009. They are:
– An average improvement in fuel efficiency of 1.5% per year from 2009 to 2020
– A cap on net aviation CO2 emissions from 2020 (carbon neutral growth)
– A reduction in net aviation CO2 emissions of 50% by 2050, relative to 2005 levels.
The problem with these, of course, is that because of the continued growth in air travel, there is a gap
between the actual emissions and the targets with offsetting being the only realistic near-term solution.
For many climate change campaigners, off-setting isn’t a solution at all. It is simply paying someone else
to fix the problem or buying your way out of the problem. Herein lies the issue for the industry. How should
it be communicating what it is doing without simply being accused of greenwashing? While Delta Air Lines
can claim that it has not increased its carbon footprint since 2012, capping emissions at what they were in
that year, it could not have achieved this without offsetting.
The second half of 2019 saw a number of airlines push out statements about offsetting, or being carbon
neutral from 2020, as the scale of the threat to their long-term business appeared to increase. Easyjet is
among those airlines, saying it will become the first carrier to offset carbon emissions from all flights soon.
CEO John Lundgren admitted in an interview that this is not a perfect solution, calling it an interim step
before new technologies come into play, and saying this is what customers want12. In a sign of intent,
the airline also signed a Memorandum of Understanding with Airbus for a joint research project
on hybrid and electric aircraft.
Easyjet Roadmap for De-carbonising Aviation
Conventional Advanced Hybrid Electric Full Electric
Carbon Offsets Carbon Offsets Aircraft Aircraft
Forestry, energy Improved SAFs and -200 seat narrowbody -200 seat narrowbody
efficiency and clean Direct Air Carbon Capture with up to 50% CO2 with up to 100% CO2
energy generation (DACCS) commercially reduction reduction
projects available at scale
2020 2030 2040 2050
12
Bloomberg interview 19th November 2019
10To its credit, Easyjet went further than most airlines in presenting to investors a technology roadmap for
short haul airlines. It may be very short on details but highlights that it is this lack of a roadmap from where
we are to where the industry needs to be.
Qantas has been offsetting for 10 years and claims to operate the largest offsetting programme of any
airline. It phrases the use of offsetting as part of the transition to a low carbon economy. In July 2019 the
airline launched a scheme where frequent fliers earned rewards for what they spent on offsetting.
In the meantime, there are various industry initiatives which try to combine a mix of evidence of actions
being taken, targets, benchmarking and public communication messages. Pre-eminent among them
may be the Carbon Offset and Reduction Scheme for International Aviation (CORSIA) being set up and
implemented by the UN’s International Civil Aviation Organisation (ICAO). CORSIA provides a standard
mechanism to calculate off-setting requirements for airplane operators but participation is voluntary in the
pilot which extends through to 2023.
While CORSIA is still to get up and running, in Europe the more ambitious European Emissions Trading
Scheme (ETS) has been in place since 2005 and accounts for over three quarters of international
carbon trading13. While ICAO would like CORSIA to be the only offsetting mechanism available, there is a
reluctance by the EU to encourage States to move away from the ETS. The two schemes differ in that ETS
is a market-based mechanism with a carbon price that can rise and fall, while CORSIA requires airlines to
make payments to offsetting schemes.
Aside from these schemes which are focussed on reducing net carbon emissions, there are a number of
schemes aimed at proving the sustainability credentials to the investor community such as CDP, the Dow
Jones Sustainability Index, MSCI ESG, FTSE4Good and others. These provide scores and ratings and an
evidence base for proving the environmental, social and governance (ESG) credentials of companies and
can often be seen listed in the annual reports of airlines.
CDP14, for instance, is a global not-for-profit body that runs a disclosure system for investors, companies,
cities, states and regions regarding their environmental footprint. It gathers data, scores companies on
their performance, and makes this data available to investors. Over 8,000 companies participate, many of
them global household names, and in 2018, 139 made it to the CDP climate change ‘A List’. Perhaps not
surprisingly, there were no airlines among them, although many of the world’s largest airlines participate.
Arguably, these initiatives have been too slow. They have also been aimed at the industry and at investors
but as the scale of the PR challenge has picked up pace through the latter half of 2019, airlines have been
increasingly taking their message about how green they are directly to the travelling public.
13
European Commission https://ec.europa.eu/clima/policies/ets_en
14
www.cdp.net
11THE PR BATTLE
There are a range of strategies available for airlines wanting to take their sustainability
message direct to consumers. Many have been producing Sustainability Reports for some
years, laying out their approach but these are only ever a rehearsal of the arguments
needed in battle for public opinion. Similarly, some airlines have dedicated areas of their
website, such as Air Canada’s ‘LeaveLess’.
KLM took one of the first bold moves by taking out a large print adverts in June 2019
asking the public to fly responsibly. It was almost a request to fly less.
This direct approach was designed to build trust and convey an honesty about the
problem, however KLM’s fleet is ageing, and it would be hard for the airline to boast
of its fuel-efficient planes. The very fact that a major airline was hinting at shaming its
passengers shows that climate change concerns are increasingly difficult to ignore.
Subsequently, a number of airlines have issued press statements about revised and more
ambitious targets. A common theme is the aim to be carbon neutral by 2050, as opposed
to have reduced carbon use by 50% by 2050, as in the original IATA target. These include
Aer Lingus, British Airways, Qantas and Virgin Atlantic
British Airways went a step further in October 2019, announcing that it would be offsetting
emissions on all UK domestic flights from 1st January 2020. This move requires a small
increase in fares, and it should be noted that domestic
ASK’s accounted for just 3.5% of all British Airways ASKs in 2019.
If passengers are saying they want and expect airlines to take
action on their behalf, but when it comes to checking the
box where they sign up personally for offsetting and the
associated extra cost, will we see a similar response
from more airlines?.
12ARE NEW TAXES
AROUND THE CORNER?
While consumers are free to make choices based on their pocket and conscience, governments
have a role too. Economists will point to the need to use taxation as a means to drive consumer
behaviour, but this is one area the industry has been keen to keep a lid on. Johan Lundgren, CEO
of Easyjet, speaking at the Aviation Festival in London in September 2019, said that higher taxes
will reduce the pool of funds to invest in modern technology required for cleaner airplanes. He is
right, but if we are indeed facing a climate emergency, the industry needs to wake up to the fact
that taxation, whether of passenger flights, frequency fliers or aviation fuel, will likely be surfacing
as part of a potential solution in the next year. Within the European Union the idea of taxing flights
is gaining some momentum. France announced a new tax on airlines operating from its airports in
July 2019 ranging from 1.5 euros for domestic and intra-European flights to 18 euros for business
class tickets outside the EU. There is now a coalition of nine countries asking the EU to consider
‘aviation pricing’.
Meanwhile, in the UK, the government has been quick to consider the option of removing domestic
Air Passenger Duty as a means of giving relief to struggling Flybe, demonstrating the tensions that
exist in policy use around taxation.
13THE YEAR AHEAD
FOR SUSTAINABLE FLYING
Concern about climate change is not going away. What we have seen in the past year is consumer
concern ramp up considerably. Flying shame may be having a real impact on airline traffic but so
far mainly limited to northern Europe and the effect remains relatively modest. Will 2020 see this
go mainstream or will the usual response of airlines to soft forward bookings be to lower fares and
stimulate demand among a public that readily chooses a bargain?
Offering passengers the option of choosing to pay to offset their flights has barely made a dent on
emissions when presented as an extra cost. Increasingly, consumers expect businesses to clear
up the mess themselves, so we will likely see more airlines say that they are picking up the cost for
offsetting. However, timing will be key as airlines don’t want to raise costs before competitors.
In the arena of public policy, pressure will mount on governments to use the stick as well as
the carrot, adding taxation to the arsenal of tools available to reduce emissions alongside
voluntary measures.
In the meantime, for all the data being gathered, there is a lack of data available to consumers
to make choices about whether some airlines are better to fly with from an environmental
perspective. Carbon Calculators, although widely available on various websites, don’t reflect the
measures being taken by individual airlines, such as the efficiency of the operation and the
fuel burn of the type of aircraft being used.
14WHAT DO
CONSUMERS NEED
FROM AIRLINES?
Against this backdrop, what do consumers actually want or need from airlines? There are
numerous ‘carbon calculators’ on the internet but mostly they simply take data about the distance
being flown to calculate a likely fuel burn, a proxy for carbon emitted. No account is taken of
the airline and whether it is an airline that has taken more measures to reduce emissions, or not.
Aircraft type is also not being taken into account, yet we know that one aircraft can be massively
more efficient than another. But how much visibility does the traveller really have of that?. These
online tools can help air travellers calculate their offsetting but can’t really do much for helping
them choose between a better or worse flight, or a better or worse airline.
And, as we have already seen, there is scepticism about offsetting. When large businesses offer
offsetting as part of their menu selection, is it surprising? It’s another cost item in the shopping
basket, being offered by a big business which may be perceived as part of the problem in the
first place. The more an airline flies, the more carbon emissions it generates. How full on average
an airlines’ aircraft is can provide an indication of the per passenger fuel burn, and therefore per
passenger emissions. A fuller aircraft means that per passenger emissions are lower. The average
age of aircraft in an airlines’ fleet provides a good proxy for how fuel
efficient the aircraft themselves are. The key metric which is harder to
come by, however, is the average fuel used per passenger kilometre
on an airline basis. Except for the US Department of Transport,
there is little requirement for airlines to report this data and
while some airlines voluntarily report fuel used per passenger
per kilometre, this is far from standard practice.
While airline annual reports and presentations to
investors are full of what they are doing to be greener,
it seems that there is a need for new industry-wide
metrics which allow consumers to make informed
choices that go beyond whether to fly or not,
but how to choose one airline over another.
15FOR GLOBAL
FLIGHT INFORMATION
GET IN TOUCH BY:
Calling us: Emailing us:
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+1800 342 5624
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+44 (0)1582 695050 www.oag.com
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+81 3 4578 7293
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